This is the longest series of falls in nine years. Manufacturing activity in China contracted in October for the seventh consecutive month, more than expected, according to official figures published on Friday, October 31, as uncertainties weighed on the economy ahead of the meeting between Donald Trump and Xi Jinping. This disappointing indicator was released the day after the summit between the American and Chinese presidents, which helped ease trade tensions, at least temporarily.
The Purchasing Managers’ Index (PMI) for manufacturing activity stood at 49 points in October, according to the National Statistics Office (BNE). This figure, which remarkably reflects the morale of the industrial world, is below 50 points, which marks the threshold between contraction and expansion. The October mark is well below the forecasts of analysts surveyed by the Bloomberg agency.
The Chinese economy remains affected by a prolonged crisis in the real estate sector, a high level of debt of local authorities and high unemployment among young people, which has weighed on consumption for several years. Due to weak domestic demand, the Chinese economy relies heavily on the strength of its exports.
Textiles in difficulty
However, these exports are limited by a “more complex international environment” and a drop in activity in early October during a long National Day holiday, said Huo Lihui, a statistician at the SNB, in a press release. If the processing of agricultural products or the automotive sector showed good results, the clothing and textile sectors are in greater difficulties, he noted. However, he believes the outlook remains “generally optimistic.”
Another negative sign, the composite purchasing managers’ index, which aggregates manufacturing activity and services, fell to 50 points in October (compared to 50.6 in September). China has set an ambitious growth target of “around 5%” for this year. But this is complicated by slow consumption and trade tensions between China and the United States.
Donald Trump and Xi Jinping, however, agreed on Thursday to ease their conflict during a meeting in South Korea. The United States announced a deal on rare earths, soybeans and a reduction in US customs duties on Chinese products.
Source: BFM TV
